Market Earth: Never never forget :"Lucas (1987) showed that, in an RBC model, the welfare costs of business cycles are less than one tenth of one percent of steady state consumption. In DSGE models with added frictions, the welfare costs of business cycle fluctuations are also small [Gal ́ı et al. (2007).]"

Wednesday, October 26, 2016

Never never forget :"Lucas (1987) showed that, in an RBC model, the welfare costs of business cycles are less than one tenth of one percent of steady state consumption. In DSGE models with added frictions, the welfare costs of business cycle fluctuations are also small [Gal ́ı et al. (2007).]"